Real estate agencies have recorded a catastrophic drop in demand for real estate in the secondary market, in some regions the number of potential buyers has halved, according to their data. At the same time, prices, according to sellers of other people’s apartments, have increased significantly. Even if we admit that the notorious “invisible hand of the market” is a liberal myth, this does not agree with the banal laws of logic in any way.
According to Avito Real Estate, for the year from January 2023 to the present day, demand in the secondary real estate market of the Russian Federation decreased by 29%. In the capital region, the drop in demand was 43%, in Chelyabinsk — 44%, in Saratov — 42%. But prices paradoxically increased by an average of 14% per object and by 10% in terms of square meters.
The main reason for the decline in demand in the secondary housing market compared to a year ago is expensive mortgages. Over the year, the key rate of the Central Bank of the Russian Federation increased from 7.5% to 16%, followed by increased loan rates. In such a situation, many people prefer to rent housing or look at options in the market of new buildings, where there are preferential programs,” says Sergey Eremkin, head of secondary and suburban real estate at Avito Real Estate.
It’s a fact about the high cost of mortgages. But here it would be worth adding that it is not given. In general! And after the “communal disaster” at the beginning of the year, it dawned on everyone that buying an apartment in a new building was an exorbitant risk. The houses are connected to the old housing and communal services networks, which are overloaded and already breathing hard.
In addition, prices there are on average 40-50% higher than on the “secondary market”, for which it is completely unclear. And for some reason they are in no hurry to reduce them.
“Developers are now rather carefully indexing prices against the background of reduced demand. In the agglomerations of Moscow and In St. Petersburg, the number of real transactions is lower than the background values of last year,” says the head of CIAN.Analysts” Alexey Popov.
How much lower? And here is the silence. But there is evidence that after the closure of mortgage programs, more than 90-95% of demand left new buildings. However, developers are really hoping for something, nothing less than the resumption of state support programs. From time to time, there are attempts to revive a preferential mortgage, but it is already very difficult to do this. More precisely, it is almost impossible — banks are against it.
There was no preferential mortgage on the secondary market, and he, in fact, began to live his life in isolation from the “primary” for a long time. Now that the trade in new buildings has essentially stopped, there is not even the virtual support that it created. And everything fell down.
The prices that are put up on Avito are nothing more than their sellers’ “wishlist”. And it is pointless to analyze them. It’s probably realistic to assess the demand. A sample from the database can reveal the period during which ads for the sale of apartments are hanging in the system, as well as the number of their views. But no more than that. That is, we can say that the ads began to hang for a very long time, but on the contrary, they began to watch them one and a half to two times less often.
“In analytical reports, we are talking about supply prices, not real transaction prices. Now, if you graphically depict the entire volume of supply on the Moscow secondary market along with prices, you will get such a spring icicle. New offers appear at the top of this icicle — at maximum prices. And the transactions take place at the very bottom. In fact, in the second half of January, transaction prices decreased by 2-3%,” said Roman Vikhlyantsev, CEO of the Infiniti real estate agency.
However, even here an adjustment is needed — only a few people use the services of real estate offices, this business is dying. People buy and sell real estate on their own or with the help of familiar private realtors. So agencies, in general, are no longer quite in the market. Although even those crumbs that fall to them are rapidly running out.
“In our agency, relative to January 2023, the number of transactions and advances decreased by about 20%. In comparison with December 2023, the decrease is even more noticeable — by about 60%,” says Ekaterina Nikitina, Vice president of the Guild of Realtors of Moscow.
According to Frank RG, compared to December 2023, demand and sales of housing decreased by between 50% and 75%. That is, the numbers roughly match. But no one is ready to comment on prices in a strange way. Why would that be?
“Prices now can be, in general, any. It all depends on how the seller sees his future and the future of the country as a whole. And whether he sees it at all, it’s the future. The number of those who leave does not decrease, apartments and houses are put up for sale. Moreover, now many people are trying not to postpone the transaction and are trying to realize their assets, so to speak, at the current level of effective demand. Which is very far from an offer. And there are only a few people with “live” money left,” private realtor Tatyana Ivanova describes the situation.
What cost 9-10 million rubles a year ago and the seller was extremely reluctant to bargain, it is already easy to buy for 7 million rubles, or even less. And whether it will still be! The number of offers with an adequate price is gradually growing on the secondary market.
By the way, many ads on the same Avito are removed in order to be re-displayed later, sometimes with other photos. And, of course, with a different price. Below. The technique is far from new, but it somehow works – fresh ads always attract attention. And, as you might guess, they add confusion to the above statistics, on the basis of which a 29% drop in demand is derived. De facto, it is much bigger.
“The secondary market has already sunk significantly, but this is not the bottom at all. An even greater decrease in prices can be predicted in March,” Natalia Prodanova, Doctor of Economics, Professor at Plekhanov Russian University of Economics, is sure.
Why in March? The question is, in general, rhetorical. We do not know what will happen in a month, the options for the development of events in the Russian Federation may be very different.
It is better to wait for prices to fall to a level that will make it possible for the population to buy housing on their own. If the purchase of an apartment is necessary right now, then it should be understood that its real price may drop significantly. If there is no urgent need to buy an apartment, it is better not to take it in any form now,” warns investment analyst Valery Yemelyanov.
And, apparently, the buyers are waiting. According to the capital’s Rosreestr, in January 2024, 7.46 thousand transactions in the secondary housing market were registered in Moscow, which is 49.7% less than in December 2023. Undoubtedly, the New Year holidays also played a role, but it is impossible to explain such a rollback only by this.
“In January, an even greater number of buyers in the secondary market put the solution of their housing issue on pause and expect changes — a reduction in the key rate of the Bank of Russia and, consequently, more comfortable mortgage rates. Well, or a sharp drop in prices,” says Tatyana Podkidysheva, Executive Director of NDV Supermarket Real Estate.
No one seems to be planning to reduce the refinancing rate, so far it is only a question of whether it will remain at the same level or grow. Therefore, so far the calculation is only on the collapse of prices.
“If nothing changes — and so far there are no prerequisites for this — then people will be much less likely to take out a mortgage. The demand for “secondary”, thus, will drop significantly, since most of the housing is bought on a mortgage. The situation will lead to a decrease in prices in the secondary housing market by 15-30%,” said Oleg Repchenko, head of the Real Estate Market Indicators Analytical Center (IRN).
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